Quantum Says New Team Could Recover Intrepid Indonesia Stake

Quantum Pacific Investment Ltd., the third-biggest shareholder in Australia’s Intrepid Mines Ltd., said that with a new leadership team it can recover some of the explorer’s stake in a key Indonesian asset.

Intrepid lost control of its 80 percent stake in Indonesia’s Tujuh Bukit deposit, which may contain 25 million ounces of gold and 15 billion pounds of copper, in July. The Hong Kong-based private equity investor has held talks with the asset’s new title holders each month since then to try and resolve the dispute, Greg Mazur, a founding partner at Quantum Pacific, told reporters today in a conference call.

“Unfortunately, the current board has pursued a strategy that has not gone over well with the new title holders,” Mazur said. “Instead of going in as a bull in a china shop, we have gone in and tried to sit down with the new local title holders and that has gone over well, and we’ve gotten confidence that there is a negotiated deal to be done.”

Intrepid entered into an agreement with Indonesia’s PT Indo Multi Niaga in 2008 for its stake in the Tujuh Bukit deposit in East Java. The owners of Indo Multi sold it with the mining license to a separate company last year. Intrepid, which has spent A$95 million to develop the project, filed complaints with the Indonesian police alleging fraud and embezzlement by the original shareholders of Indo Multi and associated parties, the company said in a stock exchange filing Feb. 26.

‘Commercial Settlement’

“All we have done is what any sensible or prudent company would do, we are protecting our legal rights to 80 percent of the project through legal action,” Chief Executive Officer Brad Gordon said in a phone interview today. “The only way this imbroglio is going to be resolved is through a commercial settlement.”

The gold explorer wouldn’t accept a refund of what it has spent as resolution, Gordon said.

Intrepid, based in Spring Hill, Queensland, rose 1.9 percent to 27 Australian cents at the close in Sydney today. The shares have declined 51 percent since the company announced a suspension of operations at the mine on July 20.

PT Bumi Sukses Indo, the new holder of the project license, is controlled by Indonesian businessman Edwin Soeryadjaya. Mazur said he has spoken with him as recently as last week. Soeryadjaya was not immediately available for comment when called on his mobile phone today.

Recovering Stake

Quantum Pacific is seeking to remove five Intrepid directors, including Gordon, at a shareholder meeting on June

20. A new leadership could recover a stake in the Indonesian asset in six to nine months, Mazur said.

Taurus Funds Management is Intrepid’s biggest shareholder with 8.7 percent stake followed by Van Eck Associates with 7.5 percent, according to data compiled by Bloomberg. The group represented by Quantum owns 5.4 percent.

Mazur declined to comment on whether Quantum’s plan to replace directors had received support from other shareholders.

Gordon said all major institutional and private shareholders are supporting the current management, without naming any investor.